What is a business plan?
A business plan is a written document that presents your project as a whole: what you sell, to whom, how, with what resources, and what it adds up to in figures over the first few years. It explains where the project comes from, who is behind it and the strategy you will follow.
It is often confused with the business model. The business model describes how the company makes money: what is sold, to whom and how. The business plan is its detailed, costed version. The first fits on one page, the second runs to several dozen.
The document is first and foremost meant to convince the people who fund or support your project. It is also for you: writing it shows you the vague areas, the figures that rest on nothing, the questions you cannot answer yet. Once the company is up and running, it becomes a baseline for tracking your business.
Who is your business plan for?
The content stays the same, but each reader is looking for a different answer. Before you write, ask yourself who will read the document first. That tells you which sections deserve the most care.
If you are preparing a meeting with a bank, the guide what a banker looks at in a project covers the questions that come up most often.
What structure should you follow? The 8-part template
There is no single official template. Start-up support networks offer outlines that are close to one another. Here is a simple business plan template, in an order that follows the way a reader thinks.
- The executive summary: the project on one page. What you sell, to whom, how much you need and what it pays for.
- The founder or founders: your background, the skills you bring to the project and the ones you lack.
- The project: where the idea comes from, the need you meet, the offer and its price.
- The market: target customers, how many there are, the competition, what you have observed on the ground.
- The sales strategy: how customers will hear about you and buy, through which channels, at what pace.
- The resources: premises, equipment, suppliers, people to hire.
- The financial forecasts: the financial tables and the assumptions that explain them.
- The legal framework and appendices: the intended legal structure, how far the project has progressed, quotes and supporting documents.
Bpifrance Création, the start-up guidance service of Bpifrance (the French public investment bank), says a business plan usually runs between 10 and 30 pages. Aim for the low end of that range if your project is simple. A short, precise document gets read more willingly than a long, vague one.
How to write a business plan, step by step
The most common mistake is to open a spreadsheet and start with the numbers. The numbers come last: they translate choices you need to have made first. Here is a working order that saves you from rewriting everything three times.
Step 1: check that the idea holds up
Before writing thirty pages, make sure the project meets a real need, that customers are willing to pay and that you have a reason to be chosen over a competitor. Write down what you already know and what still needs checking.
Step 2: gather the facts
Write down everything you know that can be verified: the number of potential customers in your area, the prices competitors charge, the quotes you have received, the rent for the premises you have in mind. An assumption is a value you take as given to build your forecasts, for example a number of sales per month. For each one, write down what it is based on.
Step 3: write the qualitative sections
Next, write up the project, the market, the strategy and the resources. Keep your sentences short. Avoid phrases like “fast-growing market” with no figure and no source. Whenever you quote a market figure, say where it comes from.
Step 4: put numbers on it
Build the financial tables from what you have written. If the strategy plans an opening in September, sales do not start in January. If you intend to hire in year two, the salary appears in year two.
Step 5: write the summary last
The summary comes first in the document but is written at the end, once everything else is settled. It is often the only page read in full during a first screening. It must make the project clear without reading any further.
Which financial tables should a business plan include?
The financial section is often the scary part, but it rests on a handful of well-defined tables. Bpifrance Création lists four, with forecasts covering three years.
A few useful definitions. Revenue is the total of your sales, before any expenses. Costs are all your expenses: rent, purchases, salaries, insurance. Cash is the money actually available in the account at a given moment. The break-even point is the level of sales at which the business covers all its costs.
Bpifrance Création advises caution: rather underestimate revenue and overestimate costs. To go further on building the figures, read the guide building your financial forecast.
How do you make a business plan credible?
An experienced reader is not looking for a perfect project. They are looking for a founder who knows their numbers, their risks and their limits. A few habits make the difference.
- Every figure has a source: a quote, a count, a study, a price you checked. If you have none, say so and use a low value.
- The start is slow: a new business often takes several months to find its pace. Full sales from the first month worry readers more than they reassure them.
- A cautious version exists: redo your forecasts with lower sales or a delayed opening, and show how you get through.
- Risks are named: a single supplier, premises not yet signed, a permit still to obtain. Say what you plan for each one.
- The text and the figures match: if you announce two employees, they appear in the costs.
Have your document read by someone who does not know your trade. If they cannot tell what you sell after the first page, rewrite the summary.
Which mistakes should you avoid?
Some mistakes show up in many business plans. They are easy to fix if you spot them before sending the document.
To estimate your market, start from your area and your real customers rather than a national figure: how many customers can you reach, at what pace, and at what price?
What tools and help are there for writing a business plan?
You can write your business plan with a word processor and a spreadsheet. Bpifrance Création also offers a free tool, “Mon business plan”, available once you create an account on its website. It organises the writing into modules and produces the financial tables from your data.
Start-up support networks and chartered accountants (experts-comptables) can help you build or review your forecasts. Bpifrance Création recommends getting advice from the outset. This guide gives a general method: it does not replace the advice of an accountant or adviser on your own situation.
The business plan is not the only useful document. Depending on your reader, a shorter presentation may be enough for a first contact: a pitch deck, i.e. a set of slides (see how to structure a pitch deck), or an information memorandum to present the project to investors. With Prelud, you can prepare these documents from the same information.
Sources
General information. This guide does not replace advice from a chartered accountant, a lawyer or a bank adviser.
